rent-stabilized buildings for $35M
Sugar Hill Capital Partners closed Tuesday on the $84 million purchase of a distressed senior assisted-living facility at 1 Prospect Park West in Park Slope after entering contract almost three years ago, sources told The Real Deal.
Over the three-year period, the nine-story, 169,410-square-foot property, known as Prospect Park Residence, has been embroiled in controversy. In 2014, the tenants’ families sued the facility’s owner, Haysha Deitsch, alleging he tried to evict residents in an effort to sell it by serving rotten food and turning off the air conditioning. Sugar Hill then sued Deitsch over the delayed eviction process.
In March 2016, Deitsch fired back against the tenants’ families in a $50 million suit accusing them of blocking his plans to sell. The following month, the holder of the debt, Madison Realty Capital, filed to foreclose on the building. With the closing of the sale, Madison will receive remaining payments on the $33.4 million in debt, the company confirmed.
Over the summer, Deitsch defaulted on the final payment in a $3.35 million settlement he agreed to make to the five remaining elderly residents. In September, he finally paid the settlement in full, and the building was then fully vacated.
Although the in-contract price in 2014 was $76.5 million, sources said the price grew to $84 million, or about $500 per square foot, by the time of closing. Sugar Hill, led by David Schwartz and partners, is planning to convert the building to luxury apartments.
“This is one of the most iconic buildings in Brooklyn, and is one of very few large residential sites currently available in Brooklyn that could be developed into a scalable residential project,” said TerraCRG’s Ofer Cohen, who brokered the deal with Adam Hess.
Deitsch had paid $40 million for the building in 2006. His current projects include an 11-story condominium at 243-245 Fourth Avenue in Park Slope.
Jefferies LoanCore provided a loan to replace the existing debt from Madison, sources said. The size of the new financing was not immediately clear.
Representatives for Sugar Hill declined to comment, while Deitsch could not be reached.
The former residents’ lawsuit against the state Department of Health, which approved the home’s closure, is ongoing.